- (1.) This appeal is by the Department against the CIT(A)s order dt. 24th Aug., 1989 for the asst. yr. 1986-87.
(2.) The only ground of appeal in this case is regarding the CIT(A)s finding that the assessee-company is an industrial undertaking and thereby directing the Assessing Officer to allow deduction under S. 80T of the IT Act. The ITO did not allows S. 80-I deduction to the assessee on the ground that the assessee purchases woollon carpet/jute carpets from the carpet manufacturers and sells them as carpets to Hindusthan Motors after doing some processing work like, stiching, etc., according to the buyers specification. In this view of the matter, the ITO held that the assessee does not manufacture any articles and hence, he disallowed the assessees S. 80-I claim.
(3.) The assessee went in appeal to the CIT(A) who allowed the assessees claim and directed the Assessing Officer to allow S. 80-I deduction to the assessee. In this connection, the CIT(A) has referred the definition in the Explanation to S. 5(xxxi) of the WT Act. The CIT(A) has also observed that from the business activity of the appellant, i.e., manufacturing of carpets as per the specification of the buyers, it is clear that the carpet rolls are processed to form carpets sets for use in the cars manufactured by Hindusthan Motor Ltd. Therefore, the CIT(A) considered that the appellant is an industrial undertaking and directed the Assessing Officer to allow S. 80-I deduction.;